Germany will temporarily reduce VAT on gas consumption from 19% to 7%

The German government has found a way to reduce the cost of citizens on gas – the country will reduce the value-added tax (VAT) on its consumption from 19 to 7 percent. The measure will be in effect from October 1, 2022 until March 31, 2024.

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In this way, the chancellor said, the enormous pressure that many citizens and businesses are experiencing will be reduced. The Federal Association of Energy and Water Companies of Germany, which has previously advocated a VAT reduction, has calculated that the decision will help households save 57 euros per year, and apartment owners – 190 euros per year. Scholz also announced a new package to support citizens and businesses during the energy crisis, in addition to the 30 billion euros already agreed.

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According to the director of the German Institute for Economic Research IMK Sebastian Dulyen, the tax cut will cost the government 14 billion euros, but will also help reduce the country’s inflation rate by 0.7 percentage points in the last three months of 2022. The German authorities decided to reduce the fee amid preparations for the introduction of an additional utility fee for the use of gas in heating from October 1.